Residential lending is furiously competitive. In the biggest provinces there are 50 to 100+ lenders (including credit unions) competing for your mortgage.
So it’s noteworthy when a brand new lender comes along and captures a material amount of volume. CMLS is just such a lender.
After only six months since its launch, CMLS is now:
Live with 3,000 authorized brokers
Poised to exceed a billion dollars of volume in 12 months
Doubling its underwriting staff
We asked Dan Putnam, CMLS’s SVP of Business Development, why the company has gained traction in the broker market.
“I believe the brokerage community recognizes the need to get behind and support non-bank lenders who deal exclusively in the mortgage brokerage space,” he said.
CMLS tries to make that easy with perks like a trailer fee model. Trailers have become a big fat carrot for brokers who have heightened sensitivity to banks sinking their teeth into clients at renewal. These bank retention practices dramatically reduce the odds of a broker ever getting a client back at maturity. CMLS’s trailer fee model, however, protects the broker’s ongoing revenue whenever a client renews with the company.
(Other established trailer fee lenders include Merix Financial, Street Capital, Moncana Bank, and AGF.)
Also helping its cause is a full suite of products, from a 1-year fixed to a 10-year fixed and a variable. Each term has a host of client-friendly features like 20/20 prepayment options, fully discounted rates on conversions to a fixed term (for variable mortgages), blends and increases without penalty, and full portability.
As for pricing, it’s been a mixed bag. CMLS’s fixed rates have been mostly average, including its #1 product, the 5-year fixed. In a world full of rate comparison sites, however, it’s getting harder to compete by selling run-of-the-mill rates.
On CMLS’s variable-rate mortgage, however, pricing is strong. Its VRM is currently available at prime – 0.50%, with solid broker compensation (including trailers). That and a good feature set make CMLS’s variable one of the most attractive all-around VRMs in the industry.
In addition to the above, CMLS also has a financial stability advantage. The company is a sheer powerhouse in commercial mortgage securitization. It manages a program called the Canadian Commercial Mortgage Origination Trust, which is one of only two active commercial mortgage-backed securities (CMBS) vehicles in Canada at the moment. “We think we may have a hand in more CMBS issuance in Canada than anyone else this year,” notes CEO Chris Brossard.
On the residential side, CMLS is one of only a few non-bank lenders to be a direct issuer of NHA mortgage-backed securities and Canada Mortgage Bonds. (It’s quite the small club.) But despite this coveted status, it’s not economical to use it for residential mortgage funding just yet. Brossard adds, “We’ve elected to work with some of our key wholesale partners first before we tap the securitization market, specifically the NHA MBS market. The decision as to when to tap the NHA MBS market will depend on mortgage rates, bond rates, our production volumes and other factors.”
On top of everything else, CMLS has a highly experienced sales and underwriting team in place.
With more consistently competitive fixed-rate pricing, the company could quickly become a dangerous threat to its non-bank peers.